Introduction for co-investment opportunities

DJBanker's picture
Rank: Baboon | 135

Hi Monkeys,

I wanted to ask if anyone is aware of how best to reach out to HNW, FOs and other investors interested in co-investment opportunities with a private equity firm; specifically, a PE firm that invests in minority interests of hedge fund GPs.

Any insight would be appreciated.

Thanks,

DJBanker

Comments (6)

Best Response
Mar 2, 2017

Based on the title on your profile and your post, I am guessing that your PE fund is trying to do a deal which is slightly too large for their fund and that it is more of a boutique PE fund. The easiest way would be to ask your current LPs for money, which they would be more than happy to do if they are happy with your PE fund's performance and if the deal is good.

Other than that, especially if you have such a specific focus (minority interests of hedge fund GPs), I would create a list of funds which do this kind of investing by utilizing all the databases I have access to. As these databases usually also have someone's contact information listed, I would simply give them a call to try to connect with them.
In regards to HNW, I think it will be a lot harder to reach out to them if you haven't already been in touch with them before. Dealing with HNW is about your relationship with them (read trust), so they might not invest in the first opportunity you show them. So while these road might not be the best to get this deal closed, it will certainly help you down the line.

    • 2
Mar 2, 2017

Kinghongkong,

Thanks for your input. Just to provide some additional clarity, we are a boutique fund that is backed by a family office. We are operating off their balance sheet and have a commitment of ~$30M for deal flow. We are in the process of deploying all the capital and have two avenues we will pursue - coinvest and launching a closed end vehicle, the former being the more pressing matter. That said, we don't have any LPs at the moment, as there is no fund at the moment.

Do you recommend any databases? We are using Prequin and personal rolodexes. The partners at the firm are very well connected in the HF world but I wanted to see if there were any additional avenues a fellow monkey could suggest.

Thanks again,

DJ

    • 1
Mar 3, 2017

I am always more than happy to help. To be completely transparent, I have never met with any investors but I have prepared material for fundraising and sat in on meetings where our partners were discussing approaches to fundraising.

I think it will be very hard to find co-investors when you are "starting from scratch" in the sense that it would obviously be a lot easier if you already had a vehicle and existing LPs. I think the fastest and easiest way would be through the connections of the partners.
Furthermore, depending on the fund size that you are targeting for your new vehicle, you could get some placement agents to help you with raising money as good ones have a strong network of potential LPs.

I am not sure how relevant it would be for you, but it might be worth reaching out to FoFs which also do co-investments. I am not sure if they would be open to co-invest in the deals that you have described, if they are not invested with you and if you don't have a fund in general, but it might be worth a shot.

I don't know which other databases you could use as I haven't had to do this myself before.

I am sorry that I couldn't be more helpful!

    • 2
Mar 3, 2017

That's what we're doing - connections of the partners, some of my contacts from previous jobs, conferences, etc. We have considered the placement agent route as well - more specifically for the Middle East and Asia. Only looking to raise around $50M, so not targeting larger allocators. More in the FO and HNW world. FoFs are also an avenue we are pursuing, although like you said, a co-investment in a HF GP does not seem to be their main priority, since they are already LPs or collecting rev share as seeders / accelerators. Appreciate all the help so far! Have a great weekend.

    • 1
Mar 2, 2017

We have LPs coinvest with us all the time; since that is not an option:

most expensive route - talk to a placement agent
cheapest and most inefficient way - hit up ACG conferences, cold call, etc

    • 1
Mar 3, 2017
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